Exhibit 2.1
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STOCK PURCHASE AGREEMENT
by and between
FALCON BUILDING PRODUCTS, INC.
and
PENTAIR, INC.
Dated as of August 12, 1999
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TABLE OF CONTENTS
ARTICLE I
PURCHASE AND SALE OF THE SHARES
Section 1.1 Purchase and Sale of the Shares . . . . . . . . . . . . . 1
Section 1.2 Purchase Price. . . . . . . . . . . . . . . . . . . . . . 1
Section 1.3 Closing Payment . . . . . . . . . . . . . . . . . . . . . 1
Section 1.4 Post Closing Purchase Price Adjustment. . . . . . . . . . 2
Section 1.5 Closing . . . . . . . . . . . . . . . . . . . . . . . . . 4
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Section 2.1 Organization. . . . . . . . . . . . . . . . . . . . . . . 4
Section 2.2 Capitalization. . . . . . . . . . . . . . . . . . . . . . 4
Section 2.3 Authority Relative to this Agreement. . . . . . . . . . . 5
Section 2.4 Consents and Approvals; No Violations . . . . . . . . . . 5
Section 2.5 Financial Statements. . . . . . . . . . . . . . . . . . . 6
Section 2.6 Absence of Certain Changes; No Undisclosed Liabilities. . 6
Section 2.7 No Default. . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.8 Litigation. . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.9 Certain Agreements. . . . . . . . . . . . . . . . . . . . 7
Section 2.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.11 Environmental Matters . . . . . . . . . . . . . . . . . . 8
Section 2.12 Employee Benefit Matters. . . . . . . . . . . . . . . . . 9
Section 2.13 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.14 Labor Relations . . . . . . . . . . . . . . . . . . . . . 10
Section 2.15 Intellectual Property . . . . . . . . . . . . . . . . . . 10
Section 2.16 Real Property . . . . . . . . . . . . . . . . . . . . . . 11
Section 2.17 Compliance with Laws; Licenses and Permits. . . . . . . . 11
Section 2.18 Product Warranty and Product Liability. . . . . . . . . . 12
Section 2.19 Employment Compensation . . . . . . . . . . . . . . . . . 12
Section 2.20 Certain Relationships . . . . . . . . . . . . . . . . . . 12
Section 2.21 Year 2000 . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 2.22 Insurance.. . . . . . . . . . . . . . . . . . . . . . . . 13
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Section 3.1 Organization. . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.2 Authority Relative to this Agreement. . . . . . . . . . . 14
Section 3.3 Consents and Approvals; No Violations . . . . . . . . . . 14
Section 3.4 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.5 Funds Available . . . . . . . . . . . . . . . . . . . . . 14
Section 3.6 Absence of Proceedings. . . . . . . . . . . . . . . . . . 14
Section 3.7 Investment Intent . . . . . . . . . . . . . . . . . . . . 15
Section 3.8 Status as Accredited Investor . . . . . . . . . . . . . . 15
Section 3.9 No Outside Reliance . . . . . . . . . . . . . . . . . . . 15
ARTICLE IV
COVENANTS
Section 4.1 Conduct of Business of the Company. . . . . . . . . . . . 15
Section 4.2 Access to Information . . . . . . . . . . . . . . . . . . 17
Section 4.3 Government Approvals. . . . . . . . . . . . . . . . . . . 17
Section 4.4 Third Party Consents. . . . . . . . . . . . . . . . . . . 17
Section 4.5 Public Announcements. . . . . . . . . . . . . . . . . . . 18
Section 4.6 Directors' and Officers' Indemnification. . . . . . . . . 18
Section 4.7 Employee Contracts. . . . . . . . . . . . . . . . . . . . 18
Section 4.8 Resignation of Directors. . . . . . . . . . . . . . . . . 19
Section 4.9 Notification of Certain Matters . . . . . . . . . . . . . 19
Section 4.10 Settlement of Intercompany Accounts . . . . . . . . . . . 19
Section 4.11 Receivables Securitization Program. . . . . . . . . . . . 19
Section 4.12 Straddle Period Tax Provisions. . . . . . . . . . . . . . 19
Section 4.13 Pension and Savings Plans . . . . . . . . . . . . . . . . 20
Section 4.14 Insurance.. . . . . . . . . . . . . . . . . . . . . . . . 22
Section 4.15 Certain Agreements. . . . . . . . . . . . . . . . . . . . 23
ARTICLE V
CONDITIONS TO CLOSING
Section 5.1 Conditions to Purchaser's Obligations . . . . . . . . . . 23
Section 5.2 Conditions to Seller's Obligations. . . . . . . . . . . . 24
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ARTICLE VI
TERMINATION; AMENDMENT; WAIVER
Section 6.1 Termination . . . . . . . . . . . . . . . . . . . . . . . 24
Section 6.2 Effect of Termination . . . . . . . . . . . . . . . . . . 25
Section 6.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 6.4 Extension; Waiver . . . . . . . . . . . . . . . . . . . . 25
ARTICLE VII
MISCELLANEOUS
Section 7.1 Non-Survival of Representations and Warranties;
Agreements. . . . . . . . . . . . . . . . . . . . . . . . 25
Section 7.2 Entire Agreement; Assignment. . . . . . . . . . . . . . . 26
Section 7.3 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 7.4 Governing Law . . . . . . . . . . . . . . . . . . . . . . 27
Section 7.5 Descriptive Headings. . . . . . . . . . . . . . . . . . . 27
Section 7.6 Counterparts. . . . . . . . . . . . . . . . . . . . . . . 27
Section 7.7 Fees and Expenses . . . . . . . . . . . . . . . . . . . . 27
Section 7.8 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . 27
Section 7.9 Specific Performance. . . . . . . . . . . . . . . . . . . 28
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SCHEDULES
Schedule 1.4 Net Operating Assets at March 31, 1999
Schedule 2.1 States of Qualification
Schedule 2.2(a) Company Capitalization
Schedule 2.2(b) Subsidiary Capitalization
Schedule 2.4 No Violations
Schedule 2.5 Financial Statements
Schedule 2.6 Certain Changes; Disclosed Liabilities
Schedule 2.7 No Default
Schedule 2.8 Litigation
Schedule 2.9 Certain Agreements
Schedule 2.10 Taxes
Schedule 2.11 Environmental Matters
Schedule 2.12(a) Employee Benefit Matters: Benefits Plans
Schedule 2.12(b) Employee Benefit Matters: Certain Plans
Schedule 2.14 Labor Relations
Schedule 2.15 Intellectual Property
Schedule 2.16(a) Real Property: List of Real Properties
Schedule 2.16(b) Real Property: Consents and Defaults
Schedule 2.16(c) Real Property: Title
Schedule 2.17 Compliance with Laws; Licenses and Permits
Schedule 2.18 Product Warranty and Product Liability
Schedule 2.19 Employment Compensation
Schedule 2.20 Certain Relationships
Schedule 2.21 Year 2000
Schedule 2.22 Insurance
Schedule 4.1 Conduct of the Business of the Company
Schedule 4.7 Employee Contracts
Schedule 4.13(b) Actuarial Assumptions
Schedule 5.1(e) Terminated Agreements
Schedule 5.1(f) Consents
Schedule 7.8(c) Knowledge
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated as of August 12, 1999 (the
"AGREEMENT"), is by and between Falcon Building Products, Inc., a Delaware
corporation ("SELLER"), and Pentair, Inc., a Minnesota corporation
("PURCHASER").
WHEREAS, Seller is the owner of 100% of the issued and outstanding
capital stock (the "SHARES") of Falcon Manufacturing, Inc., a Delaware
corporation (the "COMPANY");
WHEREAS, the Company is the owner of 100% of the issued and outstanding
capital stock of DeVilbiss Air Power Company, a Delaware corporation (the
"SUBSIDIARY"); and
WHEREAS, Seller desires to sell to Purchaser the Shares, and Purchaser
desires to purchase for the amount provided herein, and on the terms and
subject to the conditions set forth in this Agreement, the Shares.
NOW, THEREFORE, in consideration of the mutual terms, conditions and
other covenants and agreements set forth herein, the parties hereto hereby
agree as follows:
ARTICLE I
PURCHASE AND SALE OF THE SHARES
Section 1.1 PURCHASE AND SALE OF THE SHARES. Subject to the terms
and conditions hereof, on the Closing Date, Seller shall sell, assign,
transfer and deliver to Purchaser, free and clear of all liens, the Shares,
and Purchaser shall purchase the Shares from Seller, at the price and in the
manner set forth in this Article I.
Section 1.2 PURCHASE PRICE. The aggregate purchase price for the
Shares is Four Hundred Sixty Million Dollars ($460,000,000) (the "BASE
PURCHASE PRICE"), subject to adjustment as provided in Section 1.4 hereof.
Section 1.3 CLOSING PAYMENT. At the Closing, Purchaser shall deliver
to Seller payment, by wire transfer to a bank account designated in writing
by Seller at least two business days prior to the Closing Date, of
immediately available funds in an amount equal to the Base Purchase Price
plus or minus the Estimated Adjustment Amount (as defined herein). The
"Estimated Adjustment Amount" means the amount by which the Base Purchase
Price would be adjusted pursuant to Section 1.4 hereof based upon an
estimated Closing Date balance sheet of the Company and the Subsidiary
prepared in good faith by Seller in a manner consistent with the accounting
methods and practices followed in the preparation of the March Balance Sheet
(as defined in Section 2.5), which balance sheet will be delivered to
Purchaser not less than five (5) business days prior to the Closing Date.
The Base Purchase Price plus or minus the Estimated Adjustment Amount is
referred to herein as the "CLOSING DATE ▇▇▇▇▇▇".
▇
Section 1.4 POST CLOSING PURCHASE PRICE ADJUSTMENT.
(a) As soon as practicable after the Closing Date, but in any event
not later than the 60th day after the Closing Date, Seller shall prepare
and deliver to Purchaser a consolidated balance sheet of the Company and
the Subsidiary as of the Closing Date in the form set forth in Schedule
1.4, prepared in a manner consistent with the accounting methods and
practices followed in the preparation of the March Balance Sheet (the
"CLOSING BALANCE SHEET"), and a certificate of Seller that the Closing
Balance Sheet has been prepared in such manner. Purchaser shall assist
Seller in the preparation of the Closing Balance Sheet and shall provide
Seller and its independent auditors access at all reasonable times to the
personnel, properties, books and records of the Company and the Subsidiary
for such purpose. Purchaser's independent auditors may participate in the
preparation of the Closing Balance Sheet; PROVIDED, HOWEVER, that Purchaser
acknowledges that Seller shall have the primary responsibility and
authority for preparing the Closing Balance Sheet.
(b) During the 30-day period following Purchaser's receipt of the
Closing Balance Sheet, Purchaser and its independent auditors shall be
permitted to review the working papers relating to the Closing Balance
Sheet. The Closing Balance Sheet shall become final and binding upon the
parties on the 30th day following delivery thereof, unless Purchaser gives
written notice of its disagreement with the Closing Balance Sheet (a
"NOTICE OF DISAGREEMENT") to Seller prior to such date. Any Notice of
Disagreement shall (i) specify in reasonable detail the nature of any
disagreement so asserted, (ii) only include disagreements based on
mathematical errors or based on Net Operating Assets not being calculated
in accordance with this Section 1.4 and (iii) be accompanied by a
certificate of Purchaser that it has complied with the covenants set forth
in Section 1.4(e). If a Notice of Disagreement is received by Seller in a
timely manner, then the Closing Balance Sheet (as revised in accordance
with this sentence) shall become final and binding upon Seller and
Purchaser on the earlier of (A) the date Seller and Purchaser resolve in
writing any differences they have with respect to the matters specified in
the Notice of Disagreement or (B) the date any disputed matters are finally
resolved in writing by the Accounting Firm (as defined herein). During the
30-day period following the delivery of a Notice of Disagreement, Seller
and Purchaser shall seek in good faith to resolve any differences that they
may have with respect to the matters specified in the Notice of
Disagreement. During such period, Seller and its auditors shall have
access to the working papers of Purchaser and its auditors prepared in
connection with their certification of the Notice of Disagreement. At the
end of such 30-day period, Seller and Purchaser shall submit to a
nationally recognized independent public accounting firm (the "ACCOUNTING
FIRM") for review and resolution any and all matters that remain in dispute
and were properly included in the Notice of Disagreement. The Accounting
Firm shall be ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ or, if such firm is unable or unwilling to
act, such other nationally recognized independent public accounting firm as
shall be agreed upon by the parties hereto in writing. The scope of the
disputes to be resolved by the Accounting Firm shall be limited to whether
the calculation of Net Operating Assets was done in accordance with this
Section 1.4, and whether there were mathematical errors in such
calculation.
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The Accounting Firm is not to make any other determination. Seller and
Purchaser agree to use reasonable efforts to cause the Accounting Firm
to render a decision resolving the matters submitted to the Accounting
Firm within 30 days following submission or, if earlier, as soon as
reasonably practicable after submission. Judgment may be entered upon
the determination of the Accounting Firm in any court having
jurisdiction over the party against which such determination is to be
enforced. The cost of the fees and expenses of the Accounting Firm
pursuant to this Section 1.4 shall be borne by Purchaser and Seller in
inverse proportion as they may prevail on matters resolved by the
Accounting Firm, which proportionate allocations shall also be
determined by the Accounting Firm at the time the determination of the
Accounting Firm is rendered on the merits of the matters submitted.
Each of Seller and Purchaser shall be responsible for the fees and
disbursements of their respective independent auditors incurred as a
result of this Section 1.4(b).
(c) The Base Purchase Price shall be increased by the amount by which
Net Operating Assets (as finally determined in accordance with this
Section 1.4) exceeds $132,353,000 or the Base Purchase Price shall be
decreased by the amount by which Net Operating Assets (as finally
determined in accordance with this Section 1.4) is less than $132,353,000,
as the case may be. The Base Purchase Price as so increased or decreased
shall hereinafter be referred to as the "ADJUSTED PURCHASE PRICE". If the
Closing Date Amount is less than the Adjusted Purchase Price, Purchaser
shall, and if the Closing Date Amount is more than the Adjusted Purchase
Price, Seller shall, within five business days after the Closing Balance
Sheet becomes final and binding on the parties, make payment by wire
transfer in immediately available funds of the amount of such difference,
together with interest thereon at a rate of six percent (6%), calculated on
the basis of the actual number of days elapsed divided by 365, from the
Closing Date to the date of payment. Either party may, in its discretion,
make a payment to the other pursuant to this Section 1.4 prior to final
determination of the Closing Balance Sheet for purpose of reducing the
interest it may be obligated to pay pursuant to such provision.
(d) The term "NET OPERATING ASSETS" means the amount by which the sum
of (i) Trade Receivables Net, (ii) Inventories Net, (iii) Other Current
Assets and (iv) Property, Plant & Equipment (before Accumulated
Depreciation) exceeds the sum of (A) Trade Payables, (B) Other Accounts
Payable, (C) Accrued Income Taxes-State, and (D) Other Accrued Expenses
as set forth on the Closing Balance Sheet.
(e) During the period of time from and after the Closing Date through
the resolution of any adjustment to the Purchase Price contemplated by this
Section 1.4, Purchaser shall afford to Seller and any accountants, counsel
or financial advisers retained by Seller in connection with any adjustment
to the Purchase Price contemplated by this Section 1.4 reasonable access
upon advance notice and during normal business hours to all the properties,
books, contracts, personnel and records of the Company and the Subsidiary
relevant to the adjustment contemplated by this Section 1.4.
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Section 1.5 CLOSING. Upon the terms and subject to the conditions
contained herein, the closing of the transactions contemplated hereby (the
"CLOSING") shall take place at the offices of ▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or any other mutually agreed
upon location, at 9:00 a.m. New York City time on the date (the "CLOSING DATE")
which is three (3) business days after the conditions set forth in Article V
hereof have been satisfied or waived, or any other mutually agreed upon time.
At the Closing, the parties will deliver to each other such certificates and
other documents as are reasonably agreed upon.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Purchaser as follows:
Section 2.1 ORGANIZATION.
(a) Seller is a corporation validly existing and in good standing
under the laws of its jurisdiction of incorporation and has all requisite
corporate power and authority to own, lease and operate its properties and
to carry on its business as now conducted.
(b) Each of the Company and the Subsidiary is a corporation validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now
conducted, and is duly qualified or licensed or in good standing to do
business in each jurisdiction in which the property owned, leased or
operated by it or the nature of the business conducted by it makes such
qualification or licensing necessary, except where the failure to have such
power or authority or to be qualified or licensed and in good standing
would not constitute a Material Adverse Effect (as defined herein). The
states in which each of the Company and the Subsidiary is, as of the date
hereof, qualified to do business are listed on Schedule 2.1. Except for
the Company's ownership of 100% of the capital stock of the Subsidiary,
neither the Company nor the Subsidiary owns or controls, directly or
indirectly, any other equity interest in any corporation, partnership,
joint venture, limited liability company, trust, firm or other entity. The
Company has heretofore made available to Purchaser accurate and complete
copies of the certificate of incorporation and by-laws, as in effect on the
date hereof, of the Company and the Subsidiary.
Section 2.2 CAPITALIZATION.
(a) The authorized capital stock of the Company consists of 1,100
shares of common stock, par value $1.00 per share, of which 1,000 shares
are issued and outstanding. All of the issued and outstanding Shares have
been validly issued, fully paid and are nonassessable and were not issued
in violation of any preemptive rights or rights of any person to acquire
such Shares. Except as disclosed on Schedule 2.2(a), all such Shares are
owned by Seller free and clear of all liens, charges, security interests,
claims or
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encumbrances, and there are no subscriptions, options, warrants, calls
or other agreements or commitments to which Seller or the Company is a
party relating to the issuance, sale, purchase, redemption, conversion,
exchange, transfer or voting of any shares of capital stock of the
Company, and there are no outstanding stockholder agreements, voting
trusts, proxies or other agreements or understandings with respect to or
concerning the purchase, sale or voting of any of the equity securities
of the Company.
(b) The authorized capital stock of the Subsidiary consists of 3,000
shares of common stock, par value $0.10 per share, of which 100 shares are
issued and outstanding. All such shares have been validly issued, fully
paid and are non-assessable and were not issued in violation of any
preemptive rights or rights of any person to acquire such securities.
Except as disclosed on Schedule 2.2(b), all such shares are owned by the
Company free and clear of all liens, charges, security interests, claims or
encumbrances, and there are no subscriptions, options, warrants, calls or
other agreements or commitments to which Seller, the Company or the
Subsidiary is a party relating to the issuance, sale, purchase, redemption,
conversion, exchange, transfer or voting of any shares of capital stock of
the Subsidiary, and there are no outstanding stockholder agreements, voting
trusts, proxies or other agreements or understandings with respect to or
concerning the purchase, sale or voting of any of the equity securities of
the Subsidiary.
Section 2.3 AUTHORITY RELATIVE TO THIS AGREEMENT. Seller has the
requisite corporate power and authority to execute and deliver this Agreement
and to consummate the transactions contemplated hereby. The execution and
delivery of this Agreement and the other documents and instruments to be
executed and delivered by Seller pursuant hereto and the consummation of the
transactions contemplated hereby have been duly authorized by the Board of
Directors of Seller. No other corporate approvals are required on the part of
Seller, the Company or the Subsidiary or their respective stockholders to
authorize the execution and delivery of this Agreement or the other documents
and instruments to be executed and delivered by Seller to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Seller and, assuming the due authorization, execution
and delivery hereof by Purchaser, constitutes a valid and binding agreement of
Seller, enforceable against Seller in accordance with its terms, except that
such enforceability (a) may be limited by bankruptcy, insolvency, moratorium or
other similar laws affecting or relating to enforcement of creditors' rights
generally and (b) is subject to general principles of equity.
Section 2.4 CONSENTS AND APPROVALS; NO VIOLATIONS.
(a) Except for applicable requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended (the "HSR ACT"), no filing
with, and no permit, authorization, consent or approval of, any
governmental body or authority is necessary for the consummation by Seller
of the transactions contemplated by this Agreement.
(b) Except as disclosed on Schedule 2.4, the execution and delivery
of this Agreement by Seller and the consummation by Seller of the
transactions contemplated
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hereby and compliance by Seller with any of the provisions hereof will
not (i) violate any provision of the certificate of incorporation or
by-laws of Seller, the Company or the Subsidiary, (ii) result in a
violation or breach of, or constitute (with or without due notice or
lapse of time or both) a default or give rise to any right of
termination, cancellation, material modification or acceleration under,
or result in the creation of any lien or encumbrance on any asset of the
Company or the Subsidiary under, any note, bond, mortgage, indenture,
license, contract, lease, agreement or other instrument or obligation to
which Seller, the Company or the Subsidiary is a party or by which any
of them or any of their properties or assets may be bound, except for
such violations, breaches, defaults, rights, liens and encumbrances that
would not, individually or in the aggregate, constitute a Material
Adverse Effect or (iii) assuming compliance with the HSR Act, violate
any order, writ, injunction, decree, statute, treaty, rule or regulation
applicable to Seller, the Company, the Subsidiary or any of their
properties or assets.
Section 2.5 FINANCIAL STATEMENTS. Attached as Schedule 2.5 are true and
correct copies of the Company's unaudited consolidated balance sheet and
statement of income for the year ended December 31, 1998, and the Company's
unaudited consolidated balance sheets and statements of income for the three
months ended March 31, 1999 (the "MARCH BALANCE SHEET") and the six months ended
June 30, 1999 (collectively, the "FINANCIAL STATEMENTS"). Except as disclosed
on Schedule 2.5, the Financial Statements have been prepared in accordance with
generally accepted accounting principles, subject to the Company Accounting
Policies (as described in Schedule 2.5), applied on a consistent basis, have
been prepared in accordance with the books and records of the Company and the
Subsidiary and fairly present in all material respects the consolidated
financial position of the Company and the Subsidiary as at the dates thereof and
the consolidated results of the Company and the Subsidiary's operations for the
periods then ended except, in the case of interim financial statements, for
normal year-end adjustments.
Section 2.6 ABSENCE OF CERTAIN CHANGES; NO UNDISCLOSED LIABILITIES.
Except as set forth in Schedule 2.6 or as contemplated by this Agreement, since
December 31, 1998, the Company and the Subsidiary have conducted their
businesses in the ordinary course consistent with past practices and have not
(a) suffered any change, condition, event or occurrence which, individually or
in the aggregate, is reasonably likely to constitute a Material Adverse Effect,
(b) entered into or modified any material transaction, other than according to
the ordinary and usual course of such businesses or (c) made any material change
in the Company's accounting principles. Except (x) for liabilities or
obligations incurred in the ordinary course of business, (y) for liabilities or
obligations incurred in connection with the transactions contemplated by this
Agreement and (z) as set forth on Schedule 2.6, since December 31, 1998, the
Company and the Subsidiary have not incurred any liabilities or obligations
(whether absolute, accrued, contingent or otherwise) and, to the knowledge of
Seller, there is no basis for any such liability or obligation, that would be
required to be reflected or reserved against in a consolidated balance sheet of
the Company prepared in accordance with generally accepted accounting
principles. None of the liabilities described in clauses (x), (y) or (z) of the
preceding sentence has or would reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect.
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Section 2.7 NO DEFAULT. Except as disclosed on Schedule 2.7, neither
the Company nor the Subsidiary is in default or violation (and no event has
occurred which with notice or the lapse of time or both would constitute a
default or violation) of any term, condition or provision of (a) its certificate
of incorporation or its by-laws, (b) any note, bond, mortgage, indenture,
license, agreement or other instrument or obligation to which the Company or the
Subsidiary is now a party or by which it or any of its properties or assets may
be bound except in the case of (b) for any defaults or violations which,
individually or in the aggregate, have not had and are not reasonably likely to
have a Material Adverse Effect.
Section 2.8 LITIGATION. Except as disclosed on Schedule 2.8 there is no
action, suit, arbitration, claim, proceeding or governmental investigation
pending nor, to the knowledge of Seller, has Seller, the Company or the
Subsidiary received any written notice or threat of any action, suit,
arbitration, claim, proceeding or governmental investigation involving the
Company or the Subsidiary before any court or other governmental or regulatory
body which is reasonably likely to result in a liability of the Company or the
Subsidiary in excess of $500,000 or have a material adverse effect on the
ability of Seller to consummate the transactions contemplated by this Agreement.
Section 2.9 CERTAIN AGREEMENTS. Except as disclosed on Schedule 2.9,
and excluding contracts, agreements or commitments for the sale or purchase of
products by the Subsidiary in the ordinary course of its business as of the date
hereof, neither the Company nor the Subsidiary is a party to or bound by any
contract, agreement or commitment (a) with respect to which the aggregate of
payments to become due from or to the Company or the Subsidiary are in excess of
$1,000,000 or for which the cost to terminate such contract, agreement or
commitment is in excess of $1,000,000 or (b) which is otherwise material to the
Company and the Subsidiary taken as a whole. Except as disclosed on Schedule
2.9, neither the Company nor the Subsidiary is a party to or bound by any
contract, agreement or commitment regarding the employment, services,
consulting, termination or severance from employment of any director, officer or
employee of the Company or the Subsidiary that provides for payments in excess
of $100,000 in any year.
Section 2.10 TAXES. For the purposes of this Agreement, the term "taxes"
shall mean all taxes (including without limitation, leasing, franchise, excise,
income, gross receipts, sales, use, occupational, tangible and intangible
personal property, real property and stamp taxes and taxes imposed under the
Internal Revenue Code of 1986, as amended (the "CODE"), payments in lieu of
taxes, levies, imposts, duties, assessments, fees (including, without
limitation, license, documentation, recording and registration fees), charges
and withholdings of any nature whatsoever, together with any penalties, fines,
additions to tax, assessments or interest thereon, whether disputed or
undisputed, howsoever due and owing to any federal, state, county, local or
foreign government or to any governmental agency, subdivision or taxing
authority of any of the foregoing by the Company or the Subsidiary or (for any
taxable year with respect to which tax liability could be imposed on the Company
or the Subsidiary pursuant to Treasury Regulation Section 1.1502-6) each
consolidated, combined or affiliated group of which the Company or the
Subsidiary is or has been a member. Except as disclosed on Schedule 2.10, the
Company, the Subsidiary and each consolidated, combined or affiliated group of
which the Company or the
7
Subsidiary is or has been a member for any taxable year for which tax
liability could be imposed on the Company or the Subsidiary pursuant to
Treasury Regulation Section 1.1502-6 (or any similar provision of any state,
local or foreign regulation) (a) have filed all federal, state, foreign and
local tax returns in respect of income or similar taxes required to be filed
for tax years ended prior to the date of this Agreement and in respect of
which such filings have become due, except for those tax returns for which
requests for extensions have been filed, and all such returns are complete
and correct in all material respects, (b) have paid or accrued all taxes
shown to be due and payable on such returns, and (c) have "open" years for
federal income tax returns only as disclosed on Schedule 2.10. Except as
disclosed on Schedule 2.10, (i) there are no audits or other examinations of
the federal and state income tax returns of the Company or the Subsidiary
pending or underway by the IRS or the appropriate state taxing authorities,
and (ii) neither the Company nor the Subsidiary has received from the IRS or
from the taxing authorities of any state, county, local or other jurisdiction
any notice of underpayment of income taxes or other deficiency which has not
been paid or accrued, nor has any objection been received with respect to any
return or report filed by the Company or the Subsidiary. Except as disclosed
on Schedule 2.10, neither the Company nor the Subsidiary is a party to any
agreement providing for the allocation or sharing of taxes. The provision
made for taxes on the March Balance Sheet was sufficient for the payment of
all taxes owed as of the date thereof. Since the date of the March Balance
Sheet, neither the Company nor the Subsidiary has incurred any taxes other
than taxes incurred in the ordinary course of business consistent in type and
amount with past practices.
Section 2.11 ENVIRONMENTAL MATTERS. Except as disclosed on Schedule
2.11, to the knowledge of Seller, the properties, assets and operations of
the Company and the Subsidiary are in compliance with applicable federal,
state and local laws, rules, regulations, orders, decrees, judgments,
permits, licenses, common law and other requirements relating to the
protection of human health or the environment including those relating to the
generation, handling, disposal, transportation, release, threatened release
or remediation of Hazardous Materials (as defined herein), other than any
such failures to be in compliance which are not, in the aggregate, reasonably
likely to constitute a Material Adverse Effect. With respect to such
properties, assets and operations, except as disclosed on Schedule 2.11, (a)
there are no conditions, circumstances, omissions, actions or plans of the
Company or the Subsidiary that are reasonably expected to interfere with,
prevent compliance with, impose liability under, or which give rise to any
claim under, any applicable Environmental Law, (b) neither the Company nor
the Subsidiary has received written notice from any court or governmental or
regulatory body that the Company or the Subsidiary is in violation or
allegedly in violation of, does not comply or allegedly does not comply with,
is responsible or potentially responsible for the investigation or cleanup of
Hazardous Materials under, or that there is a basis for liability or alleged
liability under, any applicable Environmental Law, (c) there is no civil,
criminal or administrative action, suit, demand, claim, hearing, notice of
violation, investigation, proceeding, order, decree, directive, notice or
demand letter pending or outstanding relating to Environmental Laws and
relating to the Company or the Subsidiary or any uses, activities or
operations at or in connection with the Real Property threatened against the
Company or the Subsidiary or the Real Property relating to any Environmental
Laws and (d) neither the Company nor the Subsidiary has received written
notice of a claim pursuant to any agreement that requires it to pay,
reimburse, guaranty, pledge, defend, indemnify or hold harmless any person
for or against liabilities or costs arising in
8
connection with Hazardous Materials or under Environmental Laws. "Hazardous
Material" means any substance: (i) the presence of which requires
investigation or remediation under any Environmental Law or (ii) which is
defined, regulated or designated as a "hazardous waste," "hazardous
substance," pollutant, or contaminant under any Environmental Law including,
without limitation, asbestos, polychlorinated biphenyls, petroleum, crude oil
or natural gas, or fractions thereof.
Section 2.12 EMPLOYEE BENEFIT MATTERS.
(a) All employee benefit plans covering current or former employees
of the Company and the Subsidiary or with respect to which the Company or
the Subsidiary has liability (excluding any benefit plans referred to in
the Agreement, dated October 1, 1994, among the Company, the Pension
Benefit Guaranty Corporation (the "PBGC") and the other signatories
thereto) are listed on Schedule 2.12(a), except such benefit plans which
are not material (the "BENEFIT PLANS"). True and complete copies of the
Benefit Plans and material related documents have been made available to
Purchaser. Except as provided in Schedule 2.12(a), to the extent
applicable, the Benefit Plans comply in all material respects with the
requirements of applicable law including, without limitation, the
Employment Retirement Income Security Act of 1974, as amended ("ERISA"),
and the Code, and any Benefit Plan intended to be qualified under Section
401(a) of the Code has received a favorable determination from the Internal
Revenue Service (the "IRS") or such Benefit Plan has been submitted to the
IRS for determination of its qualified status. There has been no
application for waiver or waiver of the minimum funding standards imposed
by Section 412 of the Code and no "accumulated funding deficiency" within
the meaning of Section 412(a) of the Code exists with respect to any
Benefit Plan. Except as provided in Schedule 2.12(a), neither the Company
nor the Subsidiary has incurred any material liability or penalty (i) under
Section 4975 of the Code or Section 406 of ERISA with respect to any
Benefit Plan, or (ii) to the PBGC (except for PBGC premiums). Except as
provided in Schedule 2.12(a), each Benefit Plan has been maintained and
administered in all material respects in compliance with its terms and with
applicable law including, without limitation, ERISA and the Code to the
extent applicable thereto. To the knowledge of Seller and the Company,
there are no pending, nor has Seller, the Company or the Subsidiary
received notice of any threatened, material claims (other than routine
claims for benefits) against or otherwise involving any of the Benefit
Plans. All material contributions required to be made as of the date of
this Agreement to the Benefit Plans to which the Company or the Subsidiary
is required to contribute have been made or provided for.
(b) Except as provided in Schedule 2.12(b), no Benefit Plan provides
for post-employment health, life insurance, or other welfare benefit
coverage, other than as may be required under "COBRA" pursuant to Part VI
of Title I of ERISA. Except as set forth on Schedule 2.12, each Benefit
Plan can be amended or terminated at any time without approval from any
person (other than the board of directors of the plan sponsor or the plan
administrator), without advance notice (other than the notice required by
Section 204(h) of ERISA for defined benefit pension plans), and without
liability other
9
than for benefits accrued prior to such amendment or termination.
Except as disclosed in Schedule 2.12(b), with respect to each Benefit
Plan and any other similar arrangement or plan either currently or
previously terminated, maintained, or contributed to by any entity which
either is currently or was previously under common control with the
Company as determined under Code Section 414 or ERISA Section
4001(a)(14), no event has occurred and no condition exists that after
the Closing Date could subject Purchaser, directly or indirectly, to any
liability under Section 412, 413, 4971, 4975, or 4980B of the Code or
Section 302, 502, 515, 601, 606, or Title IV of ERISA. Except as set
forth on Schedule 2.12(b), no agreement, commitment, or obligation
exists to increase any benefits under any Benefit Plan or to adopt any
new Benefit Plan. No Benefit Plan has any unfunded accrued benefits
that are not fully reflected in the Financial Statements to the extent
required by generally accepted accounting principles. No Benefit Plan
is a multiemployer plan (as defined in ERISA Sections 3(37) or
4001(a)(3). Neither the Company nor the Subsidiary contributes to or
maintains any multiple-employer plan within the meaning of Section 413
of the Code.
(c) Seller has provided Purchaser with a list of each Transferred
Employee who participates in the SERP (as defined in Section 4.13(i)) and
the current level of benefits provided to such SERP participants.
Section 2.13 BROKERS. No broker, finder or investment banker (other than
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.) is entitled to any brokerage, finder's or other fee
or commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by and on behalf of Seller, the Company or the
Subsidiary.
Section 2.14 LABOR RELATIONS. Except as set forth in Schedule 2.14, as
of the date hereof (a) there are no collective bargaining agreements to which
either the Company or the Subsidiary is a party or by which it is bound and
(b) to the knowledge of Seller, there are no pending or threatened activities
regarding the establishment, modification or extension of any such collective
bargaining agreement.
Section 2.15 INTELLECTUAL PROPERTY. Set forth on Schedule 2.15 is a
complete list of, as of the date thereon, all patents and trademarks owned or
licensed by the Company or the Subsidiary. Except as set forth in
Schedule 2.15, the Company or the Subsidiary owns or possesses adequate rights
to use all patents, trademarks, trade names, inventions, processes, designs,
formulas, know-how and other intellectual property rights used by it in the
conduct its business as presently conducted. Except as set forth in Schedule
2.15, to the knowledge of the Company, neither the Company nor the Subsidiary
has received any written notice or claim since December 31, 1998 asserting that
the Company or the Subsidiary has infringed or is infringing the intellectual
property rights of any third party.
10
Section 2.16 REAL PROPERTY.
(a) Set forth on Schedule 2.16(a) is a complete list of all real
property (i) owned by the Company or the Subsidiary (the "OWNED
PROPERTY"), or in which the Company or the Subsidiary has legal,
beneficial or equitable title together with the principal uses for which
each such Owned Property is used and (ii) with respect to which the
Company or the Subsidiary is lessee, sublessee, licensee or other
occupant or user (the "LEASED PROPERTY" and, collectively with the Owned
Property, the "REAL PROPERTY"), together with the principal uses for
which each Leased Property is used.
(b) Seller has not received written notice of and has no knowledge of
any claim of adverse possession or prescriptive rights involving any of the
Real Property which has had or is reasonably likely to have a Material
Adverse Effect. All of the Real Property is currently being ingressed and
egressed by the Company or the Subsidiary to and from the public street
systems for all usual street and road purposes. The Company has no
knowledge of any order or decree requiring repair, alteration, or
correction of any existing condition affecting any Real Property owned by
the Company. Neither the Company nor the Subsidiary has received written
notice of any material breach or event of default on its part under the
lease for any Leased Property which is material to its business and has no
knowledge of any material breach or default on the part of any other party
to such lease. All material leases for Leased Property are in full force
and effect and are valid and enforceable against the parties thereto in
accordance with their terms. No material rental or other payments are
delinquent under any such leases. Except as set forth on Schedule 2.16(b),
the transactions contemplated hereby do not require the consent of any
party to, and will not constitute an event of default under or permit any
party to terminate or change the existing terms of, any material lease.
(c) Except as disclosed on Schedule 2.16(c), the Company or the
Subsidiary, as applicable, has good and marketable title in fee simple to
the Owned Property, good leasehold title to the Leased Property, and good
title to all assets, businesses, plants, buildings, fixtures and
improvements located on the Owned Property, in each case free and clear of
any mortgages, deeds of trust, liens, security interests, judgments,
options, encroachments, easements, rights-of-way and other imperfections of
title. Except as disclosed on Schedule 2.16(c), neither the Company's nor
the Subsidiary's assets, business or properties are subject to any
restrictions with respect to the transferability thereof, and the Company's
and the Subsidiary's title thereto will not be affected in any material way
by the transactions contemplated hereby.
Section 2.17 COMPLIANCE WITH LAWS; LICENSES AND PERMITS. Except as set
forth on Schedule 2.17, each of the Company and the Subsidiary is in compliance
in all material respects with, and has for the past two years complied in all
material respects with, all applicable laws, regulations and orders. Except as
set forth on Schedule 2.17, neither the Company nor the Subsidiary has received
written notice from any governmental or regulatory body of any violation or
alleged violation of, or is subject to material liability for past or continuing
violation of, any applicable laws, regulations and orders. The Company and the
Subsidiary have all
11
material licenses, permits, approvals, authorizations and consents of all
governmental or regulatory bodies and all certification organizations
required, and all exemptions from requirements to obtain or apply for any of
the foregoing, for the conduct of the business and the operation of the
Company's and the Subsidiary's facilities. Except as set forth in Schedule
2.17, the Company and the Subsidiary are and have been in compliance, in all
material respects, with all such permits, licenses, approvals, authorizations
and consents.
Section 2.18 PRODUCT WARRANTY AND PRODUCT LIABILITY. Schedule 2.18
contains a true, correct and complete copy of the standard warranty or
warranties of the Subsidiary for sales of Products and, except as expressly
identified therein, there are no warranties, deviations from standard
warranties, commitments or obligations with respect to the return, repair or
replacement of Products. Schedule 2.18 sets forth the provision for warranty
expense reflected on the Subsidiary's financial statements for the years
ending December 31, 1997 and December 31, 1998 and for the six months ending
June 30, 1999. Schedule 2.18 also contains a description of all pending
product warranty and product liability claims. There are no defects in
design, construction or manufacture of Products that would adversely affect
performance or create an unusual risk of injury to persons or property.
Except as set forth on Schedule 2.18, since June 17, 1997 none of the
Products has been the subject of any replacement, field fix, retrofit,
modification or recall campaign and, to the Subsidiary's knowledge, no facts
or conditions exist which could reasonably be expected to result in such a
recall campaign. All Products have been designed, manufactured and labeled
so as to meet and comply in all material respects with all governmental
standards and specifications and all applicable laws currently in effect, and
have received all governmental approvals necessary to allow their sale and
use. "PRODUCTS" means any and all products currently or at any time
previously designed, manufactured, distributed or sold by the Subsidiary or
any predecessor under any brand name or ▇▇▇▇ under which products are or have
been manufactured, distributed or sold by the Subsidiary.
Section 2.19 EMPLOYMENT COMPENSATION. Schedule 2.19 contains a true
and correct list of all employees to whom the Company or the Subsidiary is
paying compensation, including bonuses and incentives, at an annual rate in
excess of $100,000 for services rendered or otherwise.
Section 2.20 CERTAIN RELATIONSHIPS. Schedule 2.20 describes each
lease, contract, agreement or other commitment between the Company or the
Subsidiary, on the one hand, and any Affiliate or officer or director of the
Company or the Subsidiary, on the other hand, obligating the Company or the
Subsidiary to make payments to such Affiliate or officer or director other
than agreements related to the employment of any such officer or director.
No Affiliate or officer or director of the Subsidiary has any direct or
indirect interest in (a) any entity that does business with the Company or
the Subsidiary in connection with the operation of, or is competitive with,
the business of the Company and the Subsidiary or (b) any property, asset or
right that is used by the Company or the Subsidiary in the conduct of its
business. "AFFILIATE" means the Company or the Subsidiary and any entity of
which the Company or the Subsidiary owns, directly or indirectly, a 10% or
greater equity interest.
12
Section 2.21 YEAR 2000. Except as identified on Schedule 2.21, to
the Company's and the Subsidiary's knowledge, none of the Products and none
of the personal property, equipment or assets owned or leased by the Company
or the Subsidiary, including but not limited to computer software, databases,
hardware, controls and peripherals, has characteristics or qualities that may
cause it to fail to operate and produce data on and after January 1, 2000
(including taking into effect that such year is a leap year), or use data
based on time periods on or after January 1, 2000 (including taking into
effect that such year is a leap year), or use data based on time periods on
or after January 1, 2000 (including taking into effect that such year is a
leap year) accurately and without delay, interruption or error solely as a
result of the fact that the time at which and the date on which such software
is operating is on or after 12:00 a.m. on January 1, 2000 (including taking
into effect that such year is a leap year) (a "YEAR 2000 DEFECT")). Except
as identified on Schedule 2.21, to the Company's and the Subsidiary's
knowledge, none of the property or assets owned or leased by the Company or
the Subsidiary will fail to perform in any material respect or require any
material repair, rewrite, conversion or other adaptation because of a Year
2000 Defect. To the Company's and the Subsidiary's knowledge, no software
licensed by the Company or the Subsidiary contains a Year 2000 Defect. The
Company and the Subsidiary have no obligations under warranty or service or
other agreements to rectify a Year 2000 Defect of any person or to indemnify
any person in the event the Company or the Subsidiary experience a Year 2000
Defect.
Section 2.22 INSURANCE. Schedule 2.22 sets forth a complete list
and description of all policies (including the carrier, a description of
coverage and the years for which such policies are applicable) of workers'
compensation, general and product liability, automotive liability and
umbrella or excess liability insurance for which the Company or the
Subsidiary are named insureds (collectively, the "INSURANCE POLICIES").
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF PURCHASER
Purchaser hereby represents and warrants to Seller as follows:
Section 3.1 ORGANIZATION. Purchaser is a corporation validly
existing and in good standing under the laws of its jurisdiction of
incorporation and has all requisite corporate power and authority to own,
lease and operate its properties and to carry on its business as now being
conducted, and is duly qualified or licensed or in good standing to do
business in each jurisdiction in which the property owned, leased or operated
by it or the nature of the business conducted by it makes such qualification
or licensing necessary, except where the failure to have such power or
authority or to be qualified or licensed and in good standing would not,
individually or in the aggregate, have a Material Adverse Effect. Purchaser
has heretofore made available to Seller accurate and complete copies of its
certificate or articles of incorporation and by-laws, or equivalent
organizational documents, and such documents have not been amended to date.
13
Section 3.2 AUTHORITY RELATIVE TO THIS AGREEMENT. Purchaser has full
corporate power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby. The execution and delivery
of this Agreement and the consummation of the transactions contemplated
hereby have been duly and validly authorized by all necessary corporate
action, and no other corporate proceedings on the part of Purchaser are
necessary to authorize this Agreement or to consummate the transactions so
contemplated. This Agreement has been duly and validly executed and
delivered by Purchaser and, assuming the due authorization, execution and
delivery hereof by Seller, constitutes a valid and binding agreement of
Purchaser, enforceable against it in accordance with its terms, except that
such enforceability (a) may be limited by bankruptcy, insolvency, moratorium
or other similar laws affecting or relating to enforcement of creditors'
rights generally and (b) is subject to general principles of equity.
Section 3.3 CONSENTS AND APPROVALS; NO VIOLATIONS.
(a) Except for applicable requirements of the HSR Act, no filing
with, and no permit, authorization, consent or approval of any governmental
body or authority is necessary for the consummation by Purchaser of the
transactions contemplated by this Agreement.
(b) The execution and delivery of this Agreement by Purchaser and the
consummation by Purchaser of the transactions contemplated hereby and
compliance by Purchaser with any of the provisions hereof will not
(i) violate any provision of the certificate or articles of incorporation
or by-laws, or equivalent organizational documents, of Purchaser,
(ii) result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default or give rise to any right of
termination, cancellation, material modification or acceleration under, any
of the terms, conditions or provisions of any note, bond, mortgage,
indenture, license, contract, agreement or other instrument or obligation
to which Purchaser is a party or by which Purchaser or any of its
properties or assets may be bound, except for such violations, conflicts
and breaches that would not, individually or in the aggregate, constitute a
Material Adverse Effect or (iii) assuming compliance with the HSR Act,
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Purchaser or any of its properties or assets.
Section 3.4 BROKERS. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of Purchaser.
Section 3.5 FUNDS AVAILABLE. Purchaser will have available to it as
of the Closing immediately available funds necessary to consummate the
transactions contemplated hereby. To the extent such funds are to be
provided by third parties, Purchaser has provided the Company with complete
and correct copies of all documents relating to the provision of such funds.
Section 3.6 ABSENCE OF PROCEEDINGS. There is no action, suit,
proceeding or investigation pending, or to the knowledge of Purchaser,
threatened, against Purchaser which
14
might adversely affect or restrict Purchaser's ability to consummate the
transactions contemplated by this Agreement.
Section 3.7 INVESTMENT INTENT. Purchaser is purchasing the Shares
hereunder solely for its own account and with no intention of distributing or
reselling the Shares or any part thereof, or interest therein, in any
transaction that would be in violation of the Securities Act of 1933, as
amended (the "SECURITIES ACT"), or any other securities laws of the United
States of America or any state thereof.
Section 3.8 STATUS AS ACCREDITED INVESTOR. Purchaser is an
"ACCREDITED INVESTOR" (as that term is defined in Rule 501 of Regulation D
under the Securities Act). Purchaser has such knowledge and experience in
business and financial matters so that Purchaser is capable of evaluating the
merits and risks of an investment in the Shares. Purchaser understands the
full nature and risk of an investment in the Shares. Purchaser further
acknowledges that it has had access to the books and records of the Company
and the Subsidiary, is generally familiar with the business being conducted
by the Company and the Subsidiary and has had an opportunity to ask questions
concerning the Company and the Subsidiary and the Shares; PROVIDED, HOWEVER,
that nothing herein shall affect the representations and warranties of Seller
hereunder.
Section 3.9 NO OUTSIDE RELIANCE. Purchaser has not relied and is not
relying upon any statement or representation not made in this Agreement or a
Schedule hereto or any document required to be provided by Seller pursuant to
this Agreement.
ARTICLE IV
COVENANTS
Section 4.1 CONDUCT OF BUSINESS OF THE COMPANY. Except as
contemplated by this Agreement, during the period from the date of this
Agreement to the Closing, Seller will cause the Company to, and the Company
will cause the Subsidiary to, conduct its operations according to its
ordinary and usual course of business and consistent with past practices, and
Seller will cause the Company to, and the Company will cause the Subsidiary
to, use its commercially reasonable best efforts, consistent with prudent
business judgment, to preserve intact its business organization, to keep
available the services of its officers and employees and to maintain
satisfactory relationships with licensors, suppliers, contractors,
distributors, customers and others having business relationships with it.
Without limiting the generality of the foregoing, and except as otherwise
contemplated in Schedule 4.1 or elsewhere in this Agreement, prior to the
Closing, Seller will cause the Company not to, and the Company will cause the
Subsidiary not to, without the prior written consent of Purchaser (not to be
unreasonably withheld):
(a) amend its certificate of incorporation or by-laws;
(b) issue, sell, encumber or deliver or agree or commit to issue,
sell, encumber or deliver any shares of capital stock, or issue any
securities convertible into, exchangeable for or representing a right to
purchase or receive, or enter into any contract or arrangement with respect
to the issuance of, shares of capital stock;
15
(c) split, combine or reclassify any shares of its capital stock;
declare, set aside or pay any dividend or other distribution (whether in
cash, stock or property or any combination thereof) in respect of its
capital stock; or redeem or otherwise acquire any of its securities or any
securities of the Subsidiary;
(d) incur or guarantee any additional indebtedness for borrowed money
other than (i) through intercompany borrowings from Seller in the ordinary
course of business or (ii) borrowings under Seller's existing revolving
credit facility and accounts receivable facility in the ordinary course;
(e) enter into, amend any existing, or adopt any new bonus, pension,
change of control, deferred compensation, health, plant closing, profit
sharing, severance or other employee benefit agreements that increase the
total compensation of any officer, director or employee of the Company or
the Subsidiary, increase the compensation or fringe benefits of any
director, officer or employee of the Company or the Subsidiary, or enter
into any contract, agreement, commitment or arrangement to do any of the
foregoing, except for any of the foregoing with respect to employees of the
Company or the Subsidiary which are (i) implemented in the ordinary course
of business consistent with past practice and will not result in a material
increase in benefits or compensation expense to the Company or the
Subsidiary or (ii) to be paid by Seller in cancellation of any outstanding
options to purchase Seller's capital stock;
(f) except for capital expenditures contemplated by clause (g) below
and except in connection with the manufacture and sale of products in the
ordinary course of business consistent with past practice, acquire (whether
by merger, consolidation or otherwise), sell (whether by merger,
consolidation or otherwise), lease, encumber, transfer or dispose of in
excess of $500,000 of assets;
(g) make or commit to make any capital expenditures other than (i)
consistent with the amended capital spending plan for the Subsidiary in
1999 attached as Schedule 4.1(g) and (ii) additional capital expenditures
not exceeding $250,000 individually and not exceeding $2.0 million in the
aggregate;
(h) make any material tax elections (except in the ordinary course of
business consistent with past practice) or settle or compromise any
material federal, state or local income tax liability in excess of any
amounts that may have been reserved therefor, or waive or extend the
statute of limitations in respect of any such taxes;
(i) (i) materially modify, amend or terminate any material contract
or agreement to which it is a party or waive, release or assign any
material rights or claims thereunder or (ii) settle any material suit or
claim of liability against the Company;
(j) except as may be required as a result of a change in law or in
generally accepted accounting principles, change any of the accounting
principles, methods or practices used by it;
16
(k) adopt a plan of complete or partial liquidation, dissolution,
consolidation, restructuring, recapitalization, reorganization or merger;
(l) enter into an agreement or make a commitment (other than
agreements or commitments under existing purchase arrangements) for the
purchase or supply of products or components of products, which involves
consideration or other expenditure, or to which the aggregate of payments
to become due from or to the Company or the Subsidiary are, in excess of
$1.0 million;
(m) directly or indirectly (through a representative or otherwise)
solicit or furnish any information to any prospective buyer, commence, or
conduct presently ongoing, negotiations with any other party or enter into
any agreement with any other party concerning the sale of the Company, the
Subsidiary, the Company's or the Subsidiary's assets or business or any
part thereof, or any equity securities of the Company or the Subsidiary (an
"ACQUISITION PROPOSAL"), and Seller shall immediately advise Purchaser of
the receipt of any Acquisition Proposal; or
(n) enter into an agreement binding the Company or the Subsidiary to
do any of the foregoing.
Section 4.2 ACCESS TO INFORMATION. From the date of this Agreement
to the Closing, upon reasonable notice and to the extent permitted by
applicable law, Seller will cause the Company to cause, and the Company will
cause the Subsidiary to cause, their respective officers, directors,
employees and auditors and agents to (a) give Purchaser and its accountants,
counsel and other authorized representatives, reasonable access during normal
business hours to the plants, offices, warehouses and other facilities, to
Company and Subsidiary management, and to the books and records of the
Company and the Subsidiary, (b) permit Purchaser and its authorized
representatives to make such reasonable inspections as they may require and
(c) furnish to Purchaser and its authorized representatives such financial
and operating data and other information with respect to the business and
properties of the Company and the Subsidiary as Purchaser may from time to
time reasonably request. Without limiting the foregoing, Seller will cause
the Company to, and the Company will cause the Subsidiary to, provide
Purchaser with interim monthly financial statements of the Company and the
Subsidiary as and when they are available.
Section 4.3 GOVERNMENT APPROVALS. Each of the parties hereto agrees
to use its commercially reasonable best efforts to take, or cause to be
taken, all action, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and regulations to consummate the
transactions contemplated by this Agreement, including without limitation
compliance with the HSR Act.
Section 4.4 THIRD PARTY CONSENTS. The Company and the Subsidiary
will use commercially reasonable efforts prior to the Closing to obtain all
consents, approvals and agreements of, and to give all notices and make all
filings with, any third parties necessary to authorize, approve or permit the
consummation of the transactions contemplated by this Agreement.
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Section 4.5 PUBLIC ANNOUNCEMENTS. Prior to the Closing, neither
party to this Agreement shall issue or seek the publication of any press
release or other public announcement with respect to the transactions
contemplated by this Agreement without the consent of the other party, except
as agreed by the parties or where such release or announcement is required by
law or by the rules of the New York Stock Exchange; provided that, prior to
making any permitted announcement, such party will seek advice of counsel as
to the need for such announcement and will utilize its commercially
reasonable best efforts to give the other party notice thereof and to consult
with the other party regarding the timing and terms thereof.
Section 4.6 DIRECTORS' AND OFFICERS' INDEMNIFICATION.
(a) Purchaser acknowledges and agrees that all rights to
indemnification now existing in favor of the directors, officers, employees
and agents of the Company and the Subsidiary (the "INDEMNIFIED PARTIES") as
provided in their respective certificates of incorporation or by-laws or by
contract or otherwise as in effect on the date hereof with respect to
matters occurring prior to the Closing shall survive the Closing and shall
continue in full force and effect for a period of not less than six years
from the Closing.
(b) Notwithstanding anything herein to the contrary, if any claim,
action, suit, proceeding or investigation (whether arising before, at or
after the Closing) is made or threatened against any Indemnified Party, on
or prior to the sixth anniversary of the Closing, the provisions of this
Section 4.6 shall continue in effect until the final disposition of such
claim, action, suit, proceeding or investigation.
(c) This covenant is intended to be for the benefit of, and shall be
enforceable by, each of the Indemnified Parties and their respective heirs
and legal representatives. The Indemnification provided for herein shall
not be deemed exclusive of any other rights to which an Indemnified Party
is entitled, whether pursuant to law, contract or otherwise. The Company
or Subsidiary shall pay all expenses, including attorneys' fees, that may
be incurred by any Indemnified Party in enforcing his or her
indemnification rights.
Section 4.7 EMPLOYEE CONTRACTS. Purchaser agrees to honor, and from
and after the Closing shall cause the Company and the Subsidiary to honor, in
accordance with their respective terms as in effect on the date hereof, all
of the employment, termination, severance, indemnity and bonus agreements and
arrangements to which the Company or the Subsidiary is a party and which are
set forth on Schedule 4.7. In the event that the Company, the Subsidiary or
Purchaser or any of their respective successors or assigns (a) consolidates
with or merges into any other person and shall not be the continuing or
surviving corporation or entity of such consolidation or merger or (b)
transfers or conveys all or substantially all of its properties and assets to
any person, then, and in each such case, to the extent necessary to
effectuate the purpose of this Section 4.7, proper provision shall be made so
that the successors and assigns of the Company, the Subsidiary or Purchaser
shall succeed to the obligations set forth in this Section 4.7 and none of
the actions described in clauses (a) or (b) shall be taken until such
provision is made.
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Section 4.8 RESIGNATION OF DIRECTORS. Prior to the Closing, Seller
will cause the Company to deliver to Purchaser evidence satisfactory to
Purchaser of the resignation of all directors of the Company and the
Subsidiary, effective upon the Closing.
Section 4.9 NOTIFICATION OF CERTAIN MATTERS. Seller shall give
prompt notice to Purchaser, and Purchaser shall give prompt notice to Seller,
of (a) the occurrence or non-occurrence of any event the occurrence or
non-occurrence of which would be likely to cause any representation or
warranty of either party contained in this Agreement to be untrue or
inaccurate and (b) any failure of Seller or Purchaser to comply with or
satisfy any covenant, condition or agreement to be complied with or satisfied
by either party hereunder; provided, however, that the delivery of any notice
pursuant to this Section 4.9 shall not limit or otherwise affect the remedies
available hereunder to the party giving or receiving such notice.
Section 4.10 SETTLEMENT OF INTERCOMPANY ACCOUNTS. At or prior to the
Closing, Seller shall cause to be settled or canceled all intercompany
advances and loans between the Company and the Subsidiary, on the one hand,
and Seller, on the other hand.
Section 4.11 RECEIVABLES SECURITIZATION PROGRAM. At or prior to the
Closing, the Subsidiary shall acquire from Seller's receivables
securitization program, or Seller shall otherwise permit Purchaser to
acquire, all of the receivables in such program that originated from sales of
product by the Subsidiary.
Section 4.12 STRADDLE PERIOD TAX PROVISIONS.
(a) Purchaser shall timely prepare and file with the appropriate
authorities all tax returns required to be filed by the Company or the
Subsidiary for any taxable period that includes (but does not end on) the
Closing Date, and for any taxable period of the Company or the Subsidiary
that ends on or before the Closing Date with respect to which the due date
(including extensions) for the timely filing of a return has not passed,
and will pay all taxes due with respect to such returns, reports and forms
(other than returns or reports in respect of (i) United States federal
income taxes, or (ii) income or similar taxes of any state in which the
Company is included in a combined report or consolidated return with Seller
for such period, which returns or reports shall be filed by Seller).
Purchaser and Seller agree to cause the Company and the Subsidiary to file
all tax returns for the period including the Closing Date on the basis that
(x) the Closing occurred as of 5:00 p.m. on the Closing Date, and (y) the
relevant taxable period ended as of the close of business on the Closing
Date, unless the relevant taxing authority will not accept a return, report
or form filed on that basis. In the case of any taxable period including,
but not ending on, the Closing Date, the income of the Company and the
Subsidiary will be apportioned to the period up to and including the
Closing Date and the period after the Closing Date by closing the books of
the Company and the Subsidiary as of the end of the Closing Date.
(b) Seller, the Company, the Subsidiary and Purchaser shall
reasonably cooperate, and shall cause their respective affiliates,
officers, employees, agents, auditors and representatives reasonably to
cooperate, in preparing and filing all returns, reports
19
and forms relating to taxes (including amended returns and claims for
refund), including maintaining and making available to each other all
records necessary in connection with taxes and in resolving all disputes
and audits with respect to all taxable periods relating to taxes.
Purchaser and Seller recognize that Seller and its affiliates will need
access, from time to time, after the Closing Date, to certain accounting
and tax records and information held by the Company and the Subsidiary
to the extent such records and information pertain to events occurring
prior to the Closing Date; therefore, Purchaser agrees, and agrees to
cause the Company and the Subsidiary, to (i) use their best efforts to
properly retain and maintain such records until such time as Seller
agrees that such retention and maintenance is no longer necessary, and
(ii) allow Seller and its agents and representatives (and agents or
representatives of any of its affiliates), at time and dates mutually
acceptable to the parties, to inspect, review and make copies of such
records as Seller may deem necessary or appropriate from time to time,
such activities to be conducted during normal business hours and at
Seller's expense.
(c) All transfer, documentary, sales, use, registration and other
such taxes incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by Purchaser, and Seller and Purchaser
shall cooperate in timely making all filings, returns, reports and forms as
may be required to comply with the provisions of such tax laws.
(d) Seller hereby indemnifies and holds harmless Purchaser from and
against all taxes, liabilities, costs and expenses incurred by Purchaser,
the Company or the Subsidiary resulting from or arising out of any
liability of the Company or the Subsidiary for taxes of any person other
than the Company or the Subsidiary under Treasury Regulation Section
1.1502-6 (or any similar provision of any state, local or foreign
regulation).
Section 4.13 PENSION AND SAVINGS PLANS.
(a) Each employee of the Subsidiary who is a current participant in
the Falcon Building Products, Inc. Employee Savings Plan (the "SAVINGS
PLAN") (i) shall have his or her accrued benefit under the Savings Plan
become 100% vested and nonforfeitable as of the Closing Date and (ii) shall
be entitled to receive an allocation of any and all employer contributions
made to the Savings Plan for the plan year which includes the Closing Date,
including the contributions required to be made pursuant to paragraph (f)
of this Section 4.13. Each employee of the Subsidiary who is a current
participant in the Falcon Building Products, Inc. Cash Balance Pension Plan
(the "CASH BALANCE PLAN") shall have his or her accrued benefit under the
Cash Balance Plan become 100% vested and nonforfeitable.
(b) Seller shall transfer, or cause the trustee of the Cash Balance
Plan to transfer, to the trustee of a qualified defined benefit pension
plan maintained by Purchaser or any entity required by Section 414 of the
Code to be treated as a single employer with Purchaser (an "ERISA
AFFILIATE") (either currently existing or hereinafter established by
20
Purchaser or such ERISA Affiliate) (the "TRANSFEREE PENSION PLAN") such
amounts (in cash or in marketable securities at market values determined by
the plan trustee) under the Cash Balance Plan as are required by Section
414(1) of the Code for each employee of the Subsidiary on the Closing Date
(the "TRANSFERRED EMPLOYEES"). The transferred amount shall be calculated
as of the Closing Date by Seller's actuaries, and agreed to by Purchaser's
actuaries (such agreement not to be unreasonably withheld), using service
and compensation for service to the Closing Date, and on the basis of the
actuarial assumptions set forth in Schedule 4.13(b), together with interest
thereon at the rate of six percent (6%), calculated on the basis of the
actual number of days elapsed divided by 365, from the Closing Date to the
date of transfer, and considering (i) as plan assets actual and receivable
contributions through the Closing Date and (ii) as plan liabilities
benefits accrued through the Closing Date. Unless otherwise agreed to in
writing by Purchaser and Seller, the transfer date shall occur within 60
days after Purchaser obtains and presents to Seller evidence satisfactory
to Seller that the Transferee Pension Plan is qualified under the
applicable provisions of the Code. Such evidence of qualification shall be
supplied by Purchaser within 90 days of the Closing Date.
(c) Seller shall transfer, or cause the trustee of the Savings Plan
to transfer, to the trustee of a qualified defined contribution pension
plan maintained by Purchaser (either currently existing or hereinafter
established by Purchaser or an ERISA Affiliate of Purchaser) (the
"TRANSFEREE SAVINGS PLAN"), in cash or in marketable securities at market
values determined by the plan trustee, the entire value of each Transferred
Employee's accounts under the Savings Plan as determined under the
provisions of the Savings Plan. Unless otherwise agreed by Seller and
Purchaser, the transfer shall occur within 60 days after Purchaser presents
to Seller evidence satisfactory to Seller that the Transferee Savings Plan
is qualified under the applicable provisions of the Code. Such evidence of
qualification shall be provided by Purchaser within 90 days of the Closing
Date.
(d) After the transfers described above, none of Seller, the Cash
Balance Plan or the Savings Plan, or any fiduciary of such plans, shall
have any liability or obligation to pay or otherwise provide to the
Transferred Employees any benefits accrued or provided for under the Cash
Balance Plan or the Savings Plan, and Purchaser, the Transferee Pension
Plan and the Transferee Savings Plan shall assume full liability for such
benefits, and shall indemnify and hold harmless Seller, the Cash Balance
Plan, the Savings Plan and the fiduciaries of such plans from and against
the same.
(e) The Transferee Pension Plan and Transferee Savings Plan (i) shall
provide respectively, for the payment of all benefits accrued under the
Cash Balance Plan and the Savings Plan (within the meaning of Section 411
and other sections of the Code) prior to the Closing Date by the
Transferred Employees; and (ii) shall recognize, respectively, the service,
prior to the Closing Date, of the Transferred Employees who participated in
the Cash Balance Plan and the Savings Plan immediately prior to the Closing
Date for eligibility, vesting and benefit accrual purposes under the
Transferee Pension Plan and Transferee Savings Plan to the same extent that
such service is recognized for such
21
purposes under the Cash Balance Plan and the Savings Plan prior to the
Closing Date (subject to the 100% vesting set forth in Section 4.13(a)
above).
(f) At Closing, Seller shall cause the Company or the Subsidiary to
pay over to the Savings Plan all employer and employee contributions of the
Company and the Subsidiary to the Savings Plan not made as of the Closing
Date for all calendar months ending on or prior to the Closing Date and for
the portion of the calendar month in which the Closing Date occurs. For
purposes of this paragraph, the employee contributions shall be those
amounts withheld or required to be withheld from employees' compensation
for the period prior to and including the Closing Date, and employer
contributions shall be the employer contributions that would be required to
be made with respect to such employee contributions.
(g) At Closing, Seller shall cause the Company or the Subsidiary to
pay over to the Cash Balance Plan the sum of (i) all contributions of the
Company and the Subsidiary to the Cash Balance Plan for the plan years of
the plan ending prior to the Closing Date remaining uncontributed, and (ii)
a pro rata portion of the Company's and/or Subsidiary's annual contribution
for the portion of the plan year in which the Closing Date occurs, such
pro-rata portion to be based solely on service and compensation for
services through the Closing Date. In each case, the annual contribution
shall be the amount necessary to meet the minimum funding standards of
ERISA Section 302 and Section 412 of the Code, determined in accordance
with the most recent actuarial valuation for the Plan.
(h) The Company and the Subsidiary shall continue to make
contributions to the Savings Plan and the Cash Balance Plan in accordance
with their respective historical business practices through the Closing
Date.
(i) As of the Closing Date, Purchaser shall assume and shall
continue, with respect to and for the benefit of all Transferred Employees,
the Falcon Building Products, Inc. Supplemental Retirement Plan ("SERP") in
accordance with Section 9.5 thereof. Purchaser shall furthermore assume
all liability under the SERP relating to the Transferred Employees, and
shall indemnify and hold Seller and the SERP harmless from and against any
and all liability relating thereto.
Section 4.14 INSURANCE. Prior to the Closing, Seller shall cause the
counter parties to the indemnity agreements and claims handling agreements
related to the Insurance Policies (including self-insured, deductible,
retrospective and guaranteed cost insurance plans) to enter into agreements, on
customary terms and conditions (including but not limited to posting customary
letters of credit or other security or collateral), with the Company and/or the
Subsidiary (or Purchaser) which shall either novate or amend such indemnity
agreements and claims handling agreements thereby transferring to the Company
and/or the Subsidiary (or Purchaser) the assumed worker's compensation, general
and automobile plan liabilities that relate to or arise out of the Company and
the Subsidiary's operations. Following the Closing, (a) Seller shall continue
to provide the Company and the Subsidiary full access to coverage under the
22
Insurance Policies, and (b) Seller shall not take any action (other than
submission of claims) in with respect to the Insurance Policies that would have
an adverse effect on the Company's or the Subsidiary's ability to avail
themselves of the coverage under the Insurance Policies.
Section 4.15 CERTAIN AGREEMENTS. From and after the Closing, Seller
shall not take any actions with respect to the agreements listed in Items 15,
26, 27, 28 or 29 of Schedule 2.9 that adversely effects the Subsidiary without
the prior written consent of Purchaser.
ARTICLE V
CONDITIONS TO CLOSING
Section 5.1 CONDITIONS TO PURCHASER'S OBLIGATIONS. The obligation of
Purchaser to purchase the Shares and effect the Closing shall be subject to the
satisfaction or waiver at or prior to the Closing of the following:
(a) no statute, rule, regulation, order, decree or injunction shall
have been enacted, entered, promulgated or enforced by any court or
governmental authority which makes illegal the purchase and sale of the
Shares or otherwise prohibits the consummation of the transactions
contemplated hereby;
(b) any waiting period applicable to the purchase and sale of the
Shares under the HSR Act shall have terminated or expired;
(c) there shall have been no material breach by Seller in the
performance of any of its covenants, agreements or obligations herein; none
of the representations and warranties of Seller contained or referred to in
Article II shall fail to be true and correct as of the date hereof and on
the Closing Date as though made on such date, except for
(i) representations and warranties that speak as of a specific date other
than the Closing Date (which need only be true and correct as of such
date), (ii) representations and warranties which are not qualified by
Material Adverse Effect or otherwise by material adversity (which need be
true and correct except for such inaccuracies as in the aggregate (together
with the inaccuracies referred to in the following clause (iii)) would not
have a Material Adverse Effect), (iii) representations and warranties which
are qualified by Material Adverse Effect or otherwise by material adversity
shall also be true and correct without regard to such qualification except
for such inaccuracies as in the aggregate (together with the inaccuracies
referred to in the preceding clause (ii)) would not have a Material Adverse
Effect and (iv) changes therein specifically permitted by this Agreement or
resulting from any transaction expressly consented to in writing by
Purchaser; and there shall have been delivered to Purchaser a certificate
to such effect, dated the Closing Date and signed by the President or other
senior executive officer of Seller;
(d) Seller shall have performed in all material respects all
agreements herein required to be performed by it on or prior to the
Closing; and
23
(e) all consents under or pursuant to the agreements listed on
Schedule 5.1(e) shall have been obtained.
Section 5.2 CONDITIONS TO SELLER'S OBLIGATIONS. The obligation of
Seller to sell the Shares and effect the Closing shall be subject to the
satisfaction or waiver at or prior to the Closing of the following:
(a) no statute, rule, regulation, order, decree or injunction shall
have been enacted, entered, promulgated or enforced by any court or
governmental authority which makes illegal the purchase and sale of the
Shares or otherwise prohibits the consummation of the transactions
contemplated hereby;
(b) any waiting period applicable to the purchase and sale of the
Shares under the HSR Act shall have terminated or expired;
(c) there shall have been no material breach by Purchaser in the
performance of any of its covenants, agreements or obligations herein; none
of the representations and warranties of Purchaser contained or referred to
in Article III shall fail to be true and correct as of the date hereof and
on the Closing Date as though made on such date, except for
(i) representations and warranties that speak as of a specific date other
than the Closing Date (which need only be true and correct as of such
date), (ii) representations and warranties which are not qualified by
Material Adverse Effect or otherwise by material adversity (which need be
true and correct except for such inaccuracies as in the aggregate (together
with the inaccuracies referred to in the following clause (iii)) would not
have a Material Adverse Effect), (iii) representations and warranties which
are qualified by Material Adverse Effect or otherwise by material adversity
shall also be true and correct without regard to such qualification except
for such inaccuracies as in the aggregate (together with the inaccuracies
referred to in the preceding clause (ii)) would not have a Material Adverse
Effect and (iv) changes therein specifically permitted by this Agreement or
resulting from any transaction expressly consented to in writing by Seller;
and there shall have been delivered to Seller a certificate to such effect,
dated the Closing Date and signed by the President or other senior
executive officer of Purchaser;
(d) Purchaser shall have performed in all material respects all
agreements herein required to be performed by it on or prior to the
Closing; and
(e) all consents under or pursuant to the agreements listed on
Schedule 5.1(f) shall have been obtained.
ARTICLE VI
TERMINATION; AMENDMENT; WAIVER
Section 6.1 TERMINATION. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
24
(a) by mutual written consent of Purchaser and Seller;
(b) by Purchaser or Seller if the Closing shall not have occurred on
or before September 30, 1999; provided, however, that the right to
terminate the Agreement under this Section 6.1(b) shall not be available to
any party whose failure to fulfill any obligation under this Agreement has
been the cause of, or resulted in, the failure of the Closing to occur on
or before such date; or
(c) by Purchaser or Seller if any court of competent jurisdiction in
the United States or other governmental body shall have issued an order,
decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the purchase and sale of the Shares and such order,
decree, ruling or other action shall have become final and nonappealable.
Section 6.2 EFFECT OF TERMINATION. Nothing contained in Section 6.1
shall relieve any party from liability for any breach of this Agreement. In the
event of the termination of this Agreement, the confidentiality agreement
previously entered into between Seller and Purchaser (the "CONFIDENTIALITY
AGREEMENT") shall survive and be in full force and effect.
Section 6.3 AMENDMENT. This Agreement may be amended by action taken by
Seller and Purchaser at any time. No such amendment shall be effective unless
it is in writing signed on behalf of each of the parties.
Section 6.4 EXTENSION; WAIVER. At any time prior to the Closing, either
party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other party, (b) waive any inaccuracies in the
representations and warranties of the other party contained herein or in any
document, certificate or writing delivered by the other parties pursuant hereto
or (c) waive compliance by the other party with any of the agreements or
conditions contained herein. Any agreement on the part of any party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party.
ARTICLE VII
MISCELLANEOUS
Section 7.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES; AGREEMENTS.
The representations and warranties made herein shall terminate upon the Closing;
PROVIDED, HOWEVER, that the representations and warranties provided in Section
2.2 shall survive until the sixth anniversary of the Closing Date; PROVIDED,
FURTHER, however, that in the case of the representations and warranties
provided in Section 2.10, to the extent the breach thereof results in the
Company or the Subsidiary being liable for taxes of any person other than the
Company or the Subsidiary pursuant to Treasury Regulation Section 1.1502-6, such
representations and warranties shall survive until 60 days following the
expiration of the applicable statute of limitations. All covenants and
agreements set forth in this Agreement shall survive in accordance with their
terms.
25
Section 7.2 ENTIRE AGREEMENT; ASSIGNMENT. This Agreement (a) together
with the Confidentiality Agreement constitutes the entire agreement between the
parties with respect to the subject matter hereof and supersedes all other prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof, (b) may not be assigned by a party, by
operation of law or otherwise, without the prior written consent of the other
party and (c) shall be binding upon the parties hereto and their respective
successors and permitted assigns.
Section 7.3 NOTICES. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given (a) upon receipt if given by delivery by hand, (b) upon transmission
if given by facsimile (receipt confirmed), (c) one business day after being sent
by prepaid overnight carrier with guaranteed delivery (with record of receipt)
or (d) five business days after being deposited in the mail by registered or
certified mail (postage prepaid, return receipt requested) to the respective
parties as follows:
if to Purchaser:
Pentair, Inc.
Waters Edge Plaza
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq.
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, III, Esq.
if to Seller:
Falcon Building Products, Inc.
▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇▇, Esq.
with a copy to:
26
▇▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: E. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
or to such other address as the person to whom notice is given may have
previously furnished to the others in writing in the manner set forth above.
Section 7.4 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
laws thereof.
Section 7.5 DESCRIPTIVE HEADINGS. The table of contents and descriptive
headings herein are inserted for convenience of reference only and are not
intended to be part of or to affect the meaning or interpretation of this
Agreement.
Section 7.6 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall he deemed to be an original, but all of which
shall constitute one and the same agreement.
Section 7.7 FEES AND EXPENSES. Each party hereto shall bear its own
expenses in connection with this Agreement and the transactions contemplated
hereby.
Section 7.8 MISCELLANEOUS.
(a) "MATERIAL ADVERSE EFFECT" means, with respect to the Company and
the Subsidiary, any material adverse effect on the financial condition,
business or results of operations of the Company and the Subsidiary, taken
as a whole, excluding in all cases any such effect resulting from one or
more of the following: (i) any events or conditions generally affecting
the industry in which the Company and the Subsidiary operate or from
changes in general business or economic conditions; (ii) the announcement
of the transactions contemplated by this Agreement or Purchaser's plans
with respect to the business conducted by the Subsidiary; (iii) compliance
by Seller, the Company or the Subsidiary with the terms of this Agreement;
and (iv) the death or disability of any executive officer of the Company or
the Subsidiary.
27
(b) "MATERIAL ADVERSE EFFECT" means, with respect to Purchaser, any
effect that is materially adverse to the ability of Purchaser to consummate
the purchase of the Shares.
(c) In each provision of this Agreement in which a representation or
warranty is qualified to the "KNOWLEDGE" of a party or by reference to
whether a party has received notice of any matter, unless otherwise stated
in such provision, such phrase means that such party does not have actual
knowledge of any state of facts which is different from the facts described
in the representation or warranty or actual knowledge of receipt of the
notice described in the representation and warranty. With respect to
Seller, the Company and the Subsidiary, such knowledge shall refer solely
to the "knowledge" of any of the individuals identified on Schedule 7.8(c).
Section 7.9 SPECIFIC PERFORMANCE. The parties acknowledge and agree
that any breach of the terms of this Agreement would give rise to irreparable
harm for which money damages would not be an adequate remedy and accordingly the
parties agree that, in addition to any other remedies, each shall be entitled to
enforce the terms of this Agreement by a decree of specific performance without
the necessity of proving the inadequacy of money damages as a remedy.
28
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
duly executed as of the day and year first above written.
FALCON BUILDING PRODUCTS, INC.
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇
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Name: ▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
PENTAIR, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Senior Vice President
and General Counsel
